UPGRADATION OF DEALERSHIP FROM INDIVIDUAL TO CORPORATE

Conditions for Transfer

  1. Such individual shall always hold 51% shareholding, either individually or with the support of permissible relatives, i.e. parents, spouse, children, brothers and sisters (40% in case of Public Listed companies) in the Corporate entity to which the dealership is sought to be granted /transferred. The shareholding of close relatives of the individual dealer, partners/dominant share holders of a Dealer firm or Corporate (consisting only of individuals and not more than four in number) namely parents, spouse, children, brothers and sisters may also be counted for arriving at dominant shareholding provided such relatives give unqualified and irrevocable support in writing to the individual concerned in respect of such shareholding. The shareholding of dominant shareholders may be allowed to be interchanged. (If the networth of the Corporate Member/Dealer or the holding company of a Member/Dealer corporate is currently Rs. 20 crores or above, they should contact the Exchange for further details.)
  1. The individual must be a Whole time Director of the corporate entity. The corporate entity must have at least 2 Directors each being at least a graduate or equivalent and having a minimum of two years of direct experience in dealing in securities business, provided at least one of the persons of the dominant promoter group holds the position of Director in the Member/Dealer corporate. The above mentioned Directors may be designated as a Whole-time Director, President or any other designation as deemed fit by the Member/Dealer.
  1. The objects clause of the Memorandum of Association of the Corporate entity should consist Stock broking or dealing in securities as the main object and should not contain any clause which enables the entity to carry on any fund based activities like leasing, hire-purchase, inter-corporate deposits, bill discounting and any other investments other than in Securities.
  1. Such transferee company shall comply with all other requirements of the Securities Contracts Regulation Act, 1956 and rules there under, the Companies Act - 1956, Securities and Exchange Board of India Act, 1992 and the rules and regulations framed there under and the Byelaws, Rules and Regulations of OTC Exchange of India.
  1. The Net Worth of the Corporate Entity should be at least Rs. 20 lakhs (excluding value of Membership/Dealership/deposits with OTCEI/other Stock Exchanges). out of which Rs. 10 lakhs should be paid-up capital. (As per annexure)
  1. In case the company is a member of any other Stock Exchange(s) then the combined paid-up capital requirements of all Exchange(s) must be met.

  1. The Dealer should pay all his outstanding dues to the Exchange prior to up gradation/conversion.
  1. Conversion/conversion will be subject to approval from SEBI/OTCEI.
  1. The transferee entity to open bank A/C’s for OTCEI operations in the new name, and if opened, close previous bank A/C’s.
  1. If the new entity is a public listed company, then a certificate from all those stock

Exchanges where it is listed.

OTCEI reserves the sole rights to change/alter/modify/delete/add any and/or all the above terms and conditions with/without giving any prior intimation to its Members/Dealers.

Documents to be submitted for Upgradation of Dealership from an Individual to a Corporate

  1. Two copies of Memorandum & Articles of Association of the transferee company having Stock broking clause.
  1. Audited balance sheet of the transferee for the last financial year-end & the latest audited half yearly/quarterly results.
  1. Detailed share-holding pattern of the transferee company (Annexure I).
  1. Details of directors with their names, residential address, their holdings in other companies, any memberships of other Stock Exchanges in individual name, directorship in other companies with Stock Exchange membership. (Annexure II).
  1. Experience certificate of at least two directors, who would be nominated by the Board to act on its behalf for all matters concerning OTCEI,showing a minimum of two years experience in share & stock market or finance related activities.
  1. Declaration on letterhead of the transferee company indicating compliance with all aspects of the guidelines. (Annexure III)
  1. Undertaking on a stamp paper of Rs 20, duly notarised agreeing to comply with all terms and conditions of Dealership (Annexure IV)
  1. Photocopy of Dealership application form of the transferor and the appointment letter issued to the transferor by OTCEI.
  1. A letter from the individual entity requesting for transfer of OTCEI Dealership to the transferee company and a letter from the transferee accepting to take the Dealership of OTCEI from the transferor. (As enclosed)
  1. A Board resolution from the transferee to the effect that all non-refundable fees and deposits remitted by the transferor to the Exchange shall be transferred to the benefit of the transferee.
  1. A Board resolution from the transferee that they have taken the above fees/deposits, on to their books from the transferor.
  1. Original SEBI Registration Certificate of the transferor, and if misplaced a duly notarised Undertaking on Rs. 20/- stamp paper (duly notarised)
  1. Details for Form A and the additional information as required by SEBI (format enclosed).
  1. Details of fee remitted to SEBI by the transferor (Annexure VI).
  1. If unlimited company a duly notarised Undertaking on Rs. 20/- stamp paper stating that the paid up capital shall not fall below the limits specified by OTCEI and maintain net worth and exposure levels as laid down by OTCEI from time to time.
  1. A duly notarised Undertaking on Rs. 20/- stamp paper from the transferor (in cases of conversion of Individual to Corporate entity and Corporate entity to its Subsidiary) stating that there are no disciplinary proceedings pending/concluded either by the Securities and Exchange Board of India or the concerned Exchange.
  1. A duly notarised Undertaking on Rs. 20/- stamp paper from the transferee as per Annexure VII
  1. Details of membership of other Stock Exchanges and NOC from all those Stock Exchanges

where the transferee has the membership, stating that the Stock Exchanges have no objection to the transferee acquiring the Dealership of OTCEI.

  1. Net worth certificate duly certified by a statutory auditor showing the net worth of the transferee as on date (Annexure V).
  1. A payment of Rs. 10,000/- (processing fee)in favour of “OTC Exchange of India” towards non-refundable Change of Status charges.
  1. One Demand Draft of Rs 5000/- towards SEBI Registration and another demand draft as per Schedule III of the Securities and Exchange Board of India (Stock Brokers and Sub-brokers) Regulations, 1992 for the business done by the Transferor based on last years turnover to be paid in next year and inclusive of Off Market transactions as Turnover Fee. Both demand draft’s favouring “Securities and Exchange Board of India” payable at Mumbai. (To be paid once the Exchange approves the up gradation)
  1. Certified true copies of Foreign Investment Promotion Board (FIPB) approvals, if any, regarding approvals sought for foreign investment in trading dealer corporate and /or holding company of trading dealer corporate.
  1. Names of 2 qualifying directors for OTCEI Operations.
  1. Details and Proof of fees remitted to SEBI fees w.r.t to membership on other Exchanges.
  1. Transferor Information Form (Annexure A)
  1. A declaration on letter-head (as per annexure VIII)

Annexure A

TRANSFEROR INFORMATION FORM

  1. Name of the transferor:
  1. Details of the current Directors:

Name / Whether directors in other corporate bodies engaged in capital markets (please give names and SEBI regn. No.)

3. Details of major shareholders:

(For this purpose, major shareholders are those having 20% or more stake in the company)

Name / Whether directors in other corporate bodies engaged in capital markets (please give names and SEBI regn. No.)

4. Details of the Associate Companies/Partnership/Proprietorship firms having direct/ indirect interest (* as defined below) in the capital market.

*(The relatives of Directors in the corporate body being a broker/ any intermediary or being partner(s)/director(s) in any broking entity/intermediary or the same set of shareholders holding substantial equity in other broking intermediary engaged in capital market)

Relatives mean husband, wife, brother, unmarried sister or any linear ascendant or descendant of an individual)

Name / SEBI Regn No. / Nature of Interest

Annexure I

Certificate of Shareholding

Share Holding Pattern of (name of Corporate entity) with Registered office at (address) as on ______

Sr. No. / Name # / No. of Shares held / Amt. Paid up / % of total
1
2
3
4
5
6
7
8
9
10
Others@
Total / 100%

Notes:

#in case of

  • Body corporate give similar details thereof separately
  • Partnership firm give names of all partners and the sharing pattern
  • HUF give name of the Karta and names of all co-parsoners.

@ - Persons holding 2% or more of the paid up capital should be shown separately and

not clubbed in Others.

Date :

Place: Signature (s)

( Managing Director and Co. Secretary)

Certificate for “Dominant Shareholding”

Submitted by (name of Corporate Entity with Registered office at ) to OTC Exchange of India.

Details of Dominant Group as on ______

Sr.No. / Name / No. of Shares @ / Total Amt. paid-up @ / % of total @
Self / Relatives / Total / Self / Relatives / Total / Self / Relatives / Total
1.
2.
3.
4.
5.
TOTAL

Date:

Place Signature (s)

( Managing Director and Co. Secretary)

Notes:

@ - For arriving at the shareholding of persons constituting the Dominant group the shareholding of close relatives. namely parents, spouse, children and their descendants, brothers and sisters may also be counted provided such relatives give unqualified and irrevocable support in writing (as per enclosed format) to the individual concerned in respect of such shareholding.

UNDERTAKING FROM RELATIVES OF PERSONS CONSTITUTING DOMINANT PROMOTER GROUP.

I, Mr./Ms./Mrs. ______, son/daughter/wife of Mr./Ms./Mrs. ______, resident of ______am the absolute owner of ______(number) of shares of Rs. ___ each, Rs. ____ per share paid up, which constitutes ______% of the total paid up capital of the company ______as on date.

I state that I shall irrevocably and unconditionally support in respect of my shareholding, Mr/Ms./Mrs. ______, a shareholder in the above-mentioned company. I further state that I have no objection to my above mentioned shareholding being clubbed with the shareholding of Mr./Ms./Mrs. ______, who is my ______(give relation $ with the latter) for the purpose of determining the dominant promoter group of the said company.

This support is irrevocable and I also undertake to give prior information to the OTC Exchange of India before selling or otherwise transferring any part or whole of my above mentioned shareholding.

Signature (s)

( Managing Director and Co. Secretary)

Witnessed by:

Signature:

Name:

Address:

Date:

$ - For arriving at the shareholding of persons constituting the Dominant group, the shareholding of close relatives, namely parents, spouse, children and their descendants, brothers and sister only may be counted.

Annexure II

Certificate dates ______200__ submitted by ______to OTCEI

DETAILS OF DIRECTOR
Name of the Corporate:______
Registered Office:______
______
Sr. No. / Name, Age / Education / Designation Since
@ / Experience No of years
# / Shareholding
No Amt
% age of total / Directorship/
controlling
shareholding in other Cos.
1
2
3
4
5
6

Date: ______

Place: ______Signature (s)

( Managing Director and Co. Secretary)

Notes:

@ : Chairman/Managing Director/Whole time Director /Director

# : Give details of experience as broker, sub-broker, authorised assistant, badge holders, remisier, etc...

Separately. Enclose Certificates/attested copies of proof of education, age and experience.

Annexure III

(Declaration to be made out on the Company's Letterhead)

We hereby declare that we have complied with the relevant notifications/guidelines issued by Central Government/Securities and Exchange Board of India on or before our becoming Dealers on the OTC Exchange of India.

1)The Company has been formed in compliance with the provisions of Section 12 of the Companies Act, 1956.

2)The Company undertakes to comply with such financial requirements and norms as may be specified by the Securities and Exchange Board of India for the registration of the company under sub-section (1) of Section 12 of the Securities and Exchange Board of India Act, 1992 (15 to 1992).

3)Under clause (I) (except clause (f) thereof) or Clause (3) (except sub-clause (f) thereof of Rule 8 of the Securities Contract (Regulation) Rules, 1957, the directors of the company are not disqualified for being members of a Stock Exchange and Directors of the Company have not held the offices of the Directors in any company which had been a member of a Stock Exchange and had been declared defaulter or expelled by a Stock Exchange.

4)Not less than two directors of the company possess a minimum of two years experience.

(a)Dealing in Securities or

(b)As portfolio manager or

(c)As investment consultants

Signature:------

(By Authorised Signatory)

Name:------

Designation:------

(Corporate entities are also requested to give a declaration indicating compliance with all aspects of the guidelines)

Annexure IV

(On stamp paper of Rs. 20/- duly notarised)

FORMAT OF UNDERTAKING

CORPORATE

(Dealer)

undertaking is given at this ...... day of ...... 199......
To
OTC EXCHANGE OF INDIA
92-93, Maker Tower 'F'
Cuffe Parade
Bombay 400 005

Hereinafter called 'OTCEI' (which expression shall unless repugnant to the context or meaning thereof means and includes their successors-in-interest, administrators and legal representatives)
BY
(Dealer Name and Address)
hereinafter called 'the Dealer' (which expression shall include their executors, administrators and legal representatives)
WHEREAS the OTCEI have admitted us as a Dealer on OTC Exchange in accordance with their rules and regulations.
AND WHEREAS the said OTCEI has asked us to furnish the undertaking in the manner and on the terms mentioned herein below:
We hereby undertake:

  1. To comply with all requirements existing and future, with regard to and in connection with our appointment as Dealer.
  2. To adhere to the Byelaws, Rules and Regulations framed by OTCEI from time to time.
  1. To ensure at least two directors have a minimum of two years experience in handling securities as broker, sub-broker, authorised assistant, Badge Holder, Remisier, jobber or market maker, investment consultant, portfolio management etc. and to ensure that at least one of the Directors is a Whole time Director.
  1. To ensure that in case of any change in the share-holding pattern or Directors, prior approval of OTCEI be obtained.
  1. To adhere to the Business Rules framed by OTCEI from time to time including those with respect to bought-out deals, underwriting regarding market making and dealing on the Exchange.
  1. To ensure that the Objects Clause of the Memorandum has Stock Broking as one of the Main Objects of the Corporate entity and also to ensure that the objects clause of the Memorandum does not enable the company to carry on any fund-based activities.
  1. To submit a copy of Offer Document/Prospectus to OTCEI for prior perusal when any Issue is being planned.
  1. To discontinue forthwith all such activities and divest all such assets as are related to fund based activities or any business other than that of securities and also not to engage in such fund based activities in future.
  1. To maintain and furnish such information and records and to submit periodic reports, statements, certificates and such other documents as may be required by OTCEI from time to time.
  1. To permit OTCEI or any other authority appointed by it for inspection, access to all records, books, information, documents as may be required therefor.
  1. To follow the rules framed by OTCEI, to furnish documents pertaining to its operations when declared defaulter and not to transact in contravention of the provisions set out, if and when disciplinary action is initiated against. To conduct prudently the business as OTCEI Dealer and agree to ensure that it will not be detrimental and harmful to the OTC market in whatever manner.
  1. To abide by the rules introduced / modified from time to time with / without prior notice.
  1. To maintain the networth at the levels specified by Exchange at all points of time.
  1. To ensure in case where the company is a member of any other stock exchange (s) it should satisfy the combined paid-up capital requirements of all these Stock exchanges including OTCEI.
  1. To use such logo / identification and sign as prescribed by OTCEI at the place of business for identification purposes.
  1. To bear and pay costs, as may be required and to establish the counter, as per specifications prescribed by OTCEI from time to time.
  1. To use the OTCEI infrastructure facilities and equipment only for the purposes for which they are meant and not to use or allow the same to be used for any other purposes.
  1. To bring in additional funds as and when required to maintain the level of Net Business Exposure from time to time, to operate on the OTCEI.
  1. To furnish security deposits, pledge of securities, hypothecation of moveable, lien on bank accounts or such other securities as may be demanded for satisfaction of Capital Adequacy from time to time and to enable OTCEI to exercise all or part of the above mentioned securities to secure recovery of default in payment, if any.
  1. To abide by the procedures set out for the purpose, if any dispute arises between the parties as to the interpretations, meaning or effect of this undertaking or as to the rights and liabilities of the parties to this undertaking, relating to OTCEI operations.
  1. To execute sign, such other documents, papers, agreements, covenants, bonds, and/or undertakings as may be prescribed or required by OTC Exchange of India from time to time.
  1. To conduct business at the OTCEI prudently and also to ensure that it will not be prejudicial or detrimental to public interest in general and the Exchange in particular.
  1. To be subject to inspection and supervision of all computer systems, software programmes, telecommunication equipment etc., which are provided by OTCEI at the office of the Dealer. To make no alterations, modifications and changes without the prior written consent of the OTCEI.
  1. Not to transfer the Dealership at least for a period of three years, from date of appointment as a Dealer.
  1. To meet the base performance levels laid down by OTCEI from time to time.
  1. To ensure compliance with the Securities Contracts(Regulations) Act & Rules, Multiple Membership rules & other guidelines, enactment’s, notification issued/modified by SEBI & Ministry of Finance from time to time.

We hereby confirm that the information provided in our application form for Dealership of the OTCEI is true to the best of our knowledge and belief and that the above undertaking will be binding on our successors (or) assignees. We understand that in case of non-compliance with any of the above, OTCEI reserves the right to review the Dealership, levy penalty, terminate or take such action as may be deemed appropriate by it.
Dated this ------day of ------One Thousand Nine Hundred Ninety ______
Signed sealed and delivered}
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By (applicant)------}
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in the presence of ------}
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1) ------}
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2) ------}